Alternative Dispute Resolution

Abstract

It is increasingly common for commercial agreements to include clauses providing for the use of a form of alternative dispute resolution, should a dispute arise. Consider critically the approach of the courts, and the guidance available from bodies such as UNCITRAL and the ICC, in discussing how far current practice goes in drafting and whether using such clauses is effective or not. Dispute resolutions in international business transactions run the gamut from friendly consultation to litigation everywhere. In between, non-binding conciliation and mediation do their best at facilitating a compromise. In between also lies international commercial arbitration ("ICA"), a binding alternative to days in court. The volume of ICA has grown enormously in recent decades, particularly in the Americas, Europe, and the Middle East. The ultimate forum selection clause is one that chooses no court at all, but selects an alternate dispute resolution mechanism, such as an arbitration tribunal. For a long period of time, the courts resisted validating such clauses, holding that they deprived the parties of due process of law (a reaction one might expect towards competitors). However, legislation was far more sympathetic to arbitration, and around the turn of the century began to enact statutes validating arbitration clauses. The issue is now firmly settled. In addition to arbitration, there are many other, even less formal, alternative dispute resolution mechanisms.